Japanese industrial production produced strong performance numbers in May, bucking the downward trend and surprising industry experts, as official data was revealed on Friday. The figures showed that Japanese factory output jumped by 2% by the end of May, the latest in the pattern of good news coming out of the Japan’s perpetually deflated economy.
“Broadly speaking, I believe this indicates a gradual recovery,” said Yasuo Yamamoto, senior economist at the Mizuho Research Institute. “This month’s gains could be attributed to production of large machinery like turbines and boilers. So it could represent mainly temporary factors,” Yamamoto added. The seemingly held-back optimism is due to the comparison with other economic numbers that were released on Friday that painted a more subdued picture for the world’s third-largest economy. Consumer prices remained relatively flat in May, although a modest increase was noted in the Tokyo metropolitan area. Household spending, another key element that industry and economy experts are watching, remain stubbornly weak, falling 1.6% from last year. These figures have been set as signals for economists on whether Japanese Prime Minister Shinzo Abe’s “Abenomics” is indeed taking hold. “Deflationary pressure appears to be broadly weakening,” Hideki Matsumura, senior economist at the Japan Research Institute, allowed, alluding to a more conservative opinion of Abe’s big-spending economic strategies.
In its defense, Japan’s economy has indeed been given an energy shot in the arms by Abe’s moves, the yen weakening to a considerable amount, making the environment hugely ideal for Japan’s export-driven economy. The initial moves have sent the stock market surging, and a positive outlook has been more or less felt by the economists who have not seen this positivity for quite a long time now. In April, Abe handpicked new leadership at the Bank of Japan, and then vowed hit induce a two-percent inflation target within two years. The target was ambitious to begin with, but at its core, it aims to reverse years of deflation and falling prices. Compounding Japan’s current challenges is the mothballing of the country’s nuclear reactors, causing bigger spending in the importing of fossil fuels. As Abe deals with the upcoming Upper House election in a month’s time, he faces the challenge of solidifying these economic initiatives to show his critics that “Abenomics” is not just a “sugar high” but a legitimate bid to revive an ailing economy.
[via The Republic]